Fed Proposes New Rules for Bank-Issued Payment Stablecoins

The Federal Reserve has proposed new rules for banks issuing payment stablecoins under its supervision. The GENIUS Act requires the Fed to establish a regulatory framework, and the proposal outlines requirements for reserve assets, capital, and redemption protections.

The rules would require payment stablecoins to be fully backed by permitted reserve assets such as short-term Treasury bills and certain other high-quality, liquid assets. The capital banks must hold would also be subject to additional risk-management requirements.

Banks seeking approval to issue payment stablecoins through a subsidiary would need to submit a business plan and financial information, among other documents. This process would give the Fed a formal review of how proposed issuers would manage operational and financial risks associated with payment stablecoins.